Women get on board

But not fast enough for Canadian advocates of female inclusion in firms’ top ranks

Laurel Broten, a former Ontario education minister, helped frame an Ontario government plan aimed at persuading publicly traded companies to increase the number of female directors and executives. (RYAN TAPLIN / Staff)

Laurel Broten has always advocated for more women on corporate boards. When she became an Ontario cabinet minister, she had the chance to do something about it.

Broten, now a Halifax-based consultant, was an architect of an Ontario government plan aimed at nudging publicly traded companies to increase the number of women directors and executives in their ranks. The gender diversity proposal is now being studied by the Ontario Securities Commission, which is expected to announce its next steps soon.

“This spring, when Ontario put this element in the provincial budget, we were really at a strong tipping point on the issue,” Broten, who left politics in July, said in a recent interview.

“It was time for a government to say, ‘This is important to the economy of our province. This is important to the economy of our country.’”

Politicians are taking aim at the boardroom’s glass ceiling as studies show Canada is falling behind other countries when it comes to gender diversity at the director level. While other countries have adopted measures to force — or encourage — companies to recruit more women for their boards and executive offices, the numbers in this country remain low.

In Canada, women’s representation in the boardroom has grown at a snail’s pace over the past 15 years.

In 1998, six per cent of director positions at Financial Post 500 companies were held by women, according to the advocacy group Catalyst. By 2011, women’s share of board seats had only reached 14.5 per cent. (The advocacy group’s next report will be released early this year.)

Although it mostly consists of publicly traded companies, the ranking also includes privately owned firms, Crown corporations and co-operatives.

One in five top Canadian companies on the Catalyst list had 25 per cent or more of board seats held by women. But almost 40 per cent of the firms had no female directors at all.

We may need to re-evaluate old notions of what a board member looks like and what characteristics make ‘good’ board members. If board members are traditionally male, and we base selection criteria on these notions, then we simply perpetuate the genderedness of boards of directors.

A TD Economics report last spring pegged the numbers as being even lower.

The bank says women make up only 11 per cent of directors among companies included in the S&P/TSX composite index. The study also found that 43 per cent of companies have all-male boards.

Alex Johnston, executive direc-tor of Catalyst Canada, says it will take another 20 years, at the current rate, to get to a point where an average of one-quarter of corporate directors are women.

“The lack of a sense of urgency has been very real and what is changing, in a Canadian context, in particular, is other countries are going at this aggressively,” she said from Toronto.

The United States is also lagging behind, Johnston added.

Nova Scotia companies, meanwhile, fare better than the national average, with almost 22 per cent of directors on the advocacy group’s 2011 census being women.

The number of big companies based in the province is small but some of them have several female directors. The Bank of Nova Scotia and Emera Inc. each had four female directors in 2013. (And Emera gets a female board chairwoman, Jackie Sheppard, this spring.) Empire Co. Ltd. has three women on its board and Chorus Aviation Inc. and High Liner Foods Inc., have one woman each.

But on the international stage, studies show that other countries are making better progress than Canada when it comes to the proportion of corporate board seats held by women.

Canada ranked ninth among 34 industrialized countries in 2011, according to a survey by GMI Ratings. That’s down from sixth place in 2009. (The United States also lost ground, falling to 11th spot from seventh.)

Advocates say the reason for Canada’s drop is the fact other countries are adopting policies to increase the numbers.

European countries such as France and Norway have set quotas for female representation on the boards of publicly traded companies. Other countries, such as Australia and the United Kingdom, are also getting results but by using a more flexible system.

For example, Australia’s securities regulator adopted diversity guidelines three years ago that require companies to disclose the number of women in senior management and on corporate boards.

The so-called “comply or explain” model being considered in Ontario is similar to Australia’s disclosure rules.

Canada’s biggest securities regulator is mulling a move that would require companies listed on the Toronto Stock Exchange to have gender diversity policies and disclose how many women hold board and senior management roles. Companies would also have to report annually on progress meeting their goals.

The measures being considered in Ontario would have a ripple effect across the country because most companies’ stock trades on the TSX.

But Ontario’s Liberal government isn’t the only one in Canada looking at the issue. The federal Conservative government set up an advisory panel last year to examine the issue of women’s representation on corporate boards.

While the comply-or-explain model is lauded by many as being the preferred step in Canada, the approach does have its critics.

One of the most prominent is Jim Leech, former CEO of the Ontario Teachers’ Pension Plan. Leech, who retired at the end of 2013, said the proposed Ontario securities proposal doesn’t go far enough.

The pension fund, one of Canada’s largest, has advocated for a quota system and penalties for non-compliance.

However, other advocates maintain that a move to require companies to be more transparent about gender diversity will have the desired result.

Among those who have urged the country’s biggest securities regulator to move ahead with the proposed plan is veteran corporate director Annette Verschuren, a Cape Breton native.

The former CEO of Home Depot Canada and Asia told commission officials in the fall that some sectors have a lot of work to do to recruit more women directors and executives.

“I think that it’s a journey for a lot of people, and I think engagement of the people (who) are making the decisions has got to be greater,” Verschuren, also chancellor of Cape Breton University, said during a roundtable discussion in Toronto.

The industries with the highest percentage of female directors, according to Catalyst, are finance and insurance and utilities. Sectors with lower female representation include manufacturing, mining and energy.

Verschuren, who couldn’t be reached for comment, also told the regulator that the proposed guidelines could be reviewed in a few years to see if additional measures are needed.

Acadia University professor Kelly Dye said Ontario’s plan should lead to a rethinking of the qualifications and experience required to be a director.

“We may need to re-evaluate old notions of what a board member looks like and what characteristics make ‘good’ board members,” said the faculty member in the Manning School of Business. “If board members are traditionally male, and we base selection criteria on these notions, then we simply perpetuate the genderedness of boards of directors.”

Dye, whose research includes gender and diversity, said quota systems are well intentioned but may result in women being seen as token board members.

The dean of the Sobey School of Business at Saint Mary’s University says companies are also discovering there’s a business case for having diversity policies. Studies show that boards are better governed, and that companies are more successful, when there’s gender balance in the boardroom and executive offices, Patricia Bradshaw said.

“Causality is always a question,” said Bradshaw, whose research has focused on diversity in the non-profit sector.

“Is it because you’ve got more women, the women cause the organization to be more effective? Or is it really the fact that progressive organizations that care about social value creation are also high performing, which I suspect.”

Although she’s no longer Ontario’s minister responsible for the status of women, Broten continues to advocate on the issue. The former litigation lawyer has also just completed a study program at the Institute of Corporate Directors in Toronto.

Now a public policy consultant, Broten thinks government and regulators have a role to play in getting more women on corporate boards. But companies still have to be the driving force for change, she added.

“If you develop your own strategy, and you ingrain that strategy in what you are doing, you will see more champions than if the government, from afar, tells you exactly how to do it,” she says.

BY THE NUMBERS

Top 10 countries in 2011 for percentage of women on corporate boards of publicly traded companies: